The City is a litmus test for PM’s European Union renegotiation

Cameron must move to protect the UK with his EU reform demands (Source: Getty)

David Cameron heads for Brussels tomorrow with a significant weight on his shoulders. The Prime Minister knows that it’s a crucial point in his efforts to renegotiate Britain’s relationship with the EU – and then, subsequently, to convince the British public that he’s done enough for them to vote “Remain”.

You may see a lot of stories in the coming days about migration, and Cameron’s bid to restrict benefits or find other measures that deter Europeans from coming to the UK. While this matter will undoubtedly use up time at the European Council meeting, there are a vast number of more pressing issues that require attention.

We cover one of these on the front of today’s newspaper – namely, the EU’s ill-conceived policy of capping bankers’ bonuses, a move that has already had the effect of pushing up salaries and posing a new threat to financial stability.

George Osborne has made his views perfectly clear, describing the cap as “entirely counterproductive” earlier this month. And back in September, the chancellor insisted that, more broadly, the health of the City would be protected by the government’s talks with fellow EU states. “A central demand in our renegotiation will be that Europe reins in costly and damaging regulation,” he wrote in City A.M.

So far, it is unclear whether or not Osborne’s pledge is being carried out. Cameron has merely unveiled four proposals for reform, which range from obvious platitudes (“competitiveness”, “economic governance”) to predictable populism (“immigration”, “sovereignty”).

It is vital that, beneath these vague ambitions, Cameron has some serious demands that will protect the UK and, ideally, help to reform the EU itself. The status of the City could prove to be a useful litmus test.

Can the PM really “rein in costly and damaging regulation”? Sticking up for bankers’ bonuses may be political poison, but the government now has solid evidence from the Bank of England to support its argument.

Today’s front page also features new polling that points to a Brexit, should Britain’s renegotiation be deemed a failure. The stakes are high, and Cameron needs to start putting some meat on the bone. Posturing over immigration is simply not enough.